Biggest Cuts in Global Oil Investment

Biggest Cuts in Global Oil InvestmentBiggest Cuts in Global Oil Investment

Global oil investments this year are on track to drop by 20%, marking their biggest decline in history, Fatih Birol, head of the International Energy Agency, said on Friday.

The halving of oil prices in the past year has hit energy companies' revenue and is discouraging them from spending on both exploration and production, Reuters reported.

"We expect this year, in 2015, global oil investments to be 20% less than 2014," Birol told a news conference at a G20 Energy Ministers' meeting in Istanbul. "This is the biggest decline in oil history."

With oil at below $50 per barrel, this has hit investment plans at major oil firms, national oil companies and independents that have had to find ways to conserve cash.

The global oil benchmark, Brent crude, has plunged from a June 2014 high above $115 a barrel to under $47 due to a global oil glut and worries about China's economy.

Cutting investment now will delay upgrades at existing fields as well as frontier exploration, meaning output could slow for years to come.

Some analysts predict a recovery for oil and gas where prices drop and stay low for years before rising. Research firm Morningstar told clients last week it anticipates oil markets fully rebalancing in 2017 at the earliest.